LME Structural Risks Persist, LME Zinc Fluctuates at Highs [SMM Morning Meeting Minutes]

Zinc Morning Meeting Minutes for November 5

Futures: Overnight, LME zinc opened at $3,107.5/mt. It briefly touched a high of $3,112.5/mt at the beginning of the session, then fluctuated around the daily average line, and fell to a low of $3,070/mt towards the end, finally closing down at $3,077.5/mt, a decrease of $30.5/mt or 0.98%. Trading volume increased to 14,686 lots, and open interest increased by 3,686 lots to 227,000 lots. Overnight, the most-traded SHFE zinc 2512 contract opened at 22,605 yuan/mt. After quickly testing 22,590 yuan/mt early in the session, its price center moved up to around 22,660 yuan/mt, finally closing down at 22,640 yuan/mt, a decrease of 40 yuan/mt or 0.2%. Trading volume decreased to 46,383 lots, and open interest decreased by 2,214 lots to 115,000 lots.

Macro: US media: Trump administration considers controlling Venezuelan oil fields; US government shutdown impasse is expected to break the 35-day record; Drone discovered at Brussels Airport, Belgian airspace closed; UK Chancellor of the Exchequer refuses to rule out tax increases in the new budget; 2026 holiday schedule announced, Chinese New Year holiday totals 9 days; Chinese Vice Premier He Lifeng meets with David Solomon, Chairman and CEO of US Goldman Sachs Group; Central Bank resumes open market government bond transactions in October, with a net injection of 20 billion yuan.

Spot Market:

Shanghai: The refined zinc purchase sentiment in Shanghai was 2.11, and the selling sentiment was 2.41. The futures market strengthened significantly in the morning, but zinc ingot availability in the market was limited. Traders continued to hold prices firm, keeping spot premiums stable. Downstream enterprises were cautious about purchasing due to high prices, resulting in mediocre overall trading activity.

Guangdong: Overall, the zinc price center rose noticeably yesterday. High prices dampened downstream purchasing enthusiasm, coupled with mediocre downstream consumption performance, leading to weak market transactions. Downstream buyers mostly priced to lock in premiums and discounts, while traders showed low willingness to sell at low prices. Under these conditions, spot premiums and discounts remained stable.

Tianjin: The refined zinc purchase sentiment in Tianjin was 1.67, and the selling sentiment was 2.21. Yesterday was the contract rollover quotation day in Tianjin. Zinc prices continued to rise to levels difficult for downstream users to accept. Inquiries were few, and traders had low selling enthusiasm, resulting in poor overall market transactions.

Ningbo: Qilin brand shipments, delayed previously, arrived in Ningbo recently. However, most of the volume was pre-sold, so spot quotations in the market remained scarce. Spot premiums held steady compared to the previous day. Downstream enterprises made purchases based on demand, and spot transaction performance was moderate.

Social Inventory: LME zinc inventory remained at 33,825 mt on November 4. According to SMM communication, as of November 3, the total zinc ingot inventory in seven regions surveyed by SMM was 161,700 mt, an increase of 200 mt from October 30 and a decrease of 1,800 mt from October 27, indicating a slight increase in domestic inventory.

Zinc Price Forecast: The LME zinc contract recorded a bearish candlestick overnight, with support provided by the 5-day moving average. The strengthening US dollar overnight exerted pressure on the upside for LME zinc, but the backwardation structure remains above $100/mt, with LME zinc expected to fluctuate at highs. Overnight, SHFE zinc recorded a four-day winning streak, facing resistance from the upper Bollinger Bands. On the fundamentals side, zinc TC accelerated its decline, raising expectations for production cuts at smelters, and export expectations persist, supporting SHFE zinc to fluctuate at highs.

Data Source Statement: Data not derived from public information are processed by SMM based on public information, market communication, and SMM's internal database model, and are for reference only, not constituting decision-making advice.